Investing Taiwan (Issue 4)

Date: Oct 2013


  • Local Education for Chinese Employees’ Children

On September 24, 2013, the Ministry of the Interior announced the amendment to Article 4 of Regulations on Permits for the People of the Mainland Area Applying for Working in Taiwan due to Internal Transfer in Multi-National Company. According to the amendment, the children of a multinational company’s Chinese directors/managers/employees may receive education in Taiwan under the following conditions:

  1. Applicant shall be less than 18 years old;
  2. Application shall be for studying in the equivalent senior high school and the applicant shall take the test for enrollment/transfer; and
  3. The special admissions will be granted to Chinese students and the number such admissions will be 1% of the local enrollments and transfers to such grade.


  • The FSC released the restriction on the purposes of futures commission merchants fund

To increase the elasticity of the purposes of futures commission merchants fund, the FSC made amendments to the restrictions according to item 4, Article 23 of Regulations Governing Futures Commission Merchants on September 25.

  1. To meet the demands for Foreign Currency Denominated Bonds, FSC released the restrictions on futures commission merchants holding domestic securities and OTC stock. A futures commission merchant could hold domestic securities with aggregate amount of up to 20% of its net value.
  2. To promote the securities firm operating futures brokerage concurrently, the FSC amended the regulations that securities firm could hold foreign currency deposit in need of fund management and the upper limit of holding is released from 10% to 20%.
  3. The total amounts of the funds mentioned above, plus funds for other purposes approved by the FSC shall not exceed 40% of such futures commission merchant’s net value.


  • Draft Amendment regarding Standards Governing the Establishment of Securities Firms

The Financial Supervisory Commission (the “FSC”) announced a draft amendment regarding Standards Governing the Establishment of Securities Firms on September 23, 2013, stating following chief points:

  1. To provide complete service for investors and allow more experiences for local bankers, the restriction will be removed and a financial institution may engage in foreign bonds transaction as an agent;
  2. A foreign securities firm intending to establish branches in Taiwan shall submit a) the approval from the securities authority of its home country and the authorization from its parent company; and b) the documents issued by its parent company in which the parent company approves the investment in Taiwan and agrees to undertake the liabilities incurred by the branch/subsidiary .
  3. To enhance the supervision of the securities business, FSC reserves the power to disapprove a) the application for incorporation of a securities firm; b) the application for conducting securities business of other financial institution; and c) the application for setting up a branch/subsidiary of a foreign securities firm or conducting securities business of other foreign financial institution.
  • The Amendment to Regulations Governing Securities Investment Trust Funds Regarding the Release of Restrictions on Mutual Fund Management in Taiwan

To enhance the flexibility of the mutual fund management, the Financial Supervisory Commission (the “FSC”) took account of the opinions on the previous proposal and integrated into the final amendment to Regulations Governing Securities Investment Trust Funds.

The amendment is presumed to come into effect soon, and the major revisions are as follows,

  1. Ease the restrictions on mutual funds’ investments, including the investments on beneficiary certificates, the shareholding ratio of balanced mutual funds, the investments of bond oriented funds on convertible bonds, warrant bonds and exchangeable bonds, and the investments of private equity index funds on securities issued by the companies of the same interests.
  2. Securities investment trust companies are allowed to make loans for buyback of shares.
  3. The funds are allowed to loan their own foreign securities either by themselves or agencies.
  4. Simplify the procedure of fund merger and extend the announcement period for the exemption of beneficiary meeting.
  • The FSC updated the ruling regarding the requirement on securities firms giving quotes for the sales of securities not under its title

According to Paragraph 1, Article 32 of the Regulations Governing Securities Firms, unless otherwise provided by law or regulation, a securities firm trading securities for its own account on the securities exchange shall not give a quote for the sale of securities not held by it. The exceptions of the abovementioned restriction has been declared by the Financial Supervisory Commission (the “FSC”) on September 30, 2011 in the ruling of Jin-Guan-Chen-Quan-Zi No.1000043908, in which the FSC stated that a securities firm may give a quote for the sale of securities not held by it in certain circumstances, including the case of the securities firm conducting securities lending business subject to Item 10, Article 24 of the Regulations Governing Securities Lending by Securities Firms and Item 2, Paragraph 1, Article 38 of the Regulations Governing Securities Finance Enterprises.

Recently, the FSC announced the ruling of Jin-Guan-Chen-Quan-Zi No.1020037831 on September 18, 2013 to supplement the previous ruling mentioned above. The announcement declares that in the case that a securities firm may give a quote for the sale of securities not held by it, (1) the beneficial interest certificates of ETF with domestic or foreign component securities may be quoted for sale by the price lower than the closing price of the previous business day, while (2) other securities which may be traded via margin loans and stock loans may be quoted for sale by the price lower than the closing price of the previous business day when the daily closing price is above the decline limit. In the latter case, the securities shall not be quoted for sale by the price lower than the closing price of the previous business day before the end of the next business day.

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